Top 10 Trending AI Stocks Amid Latest News and Analyst Ratings

3. Apple Inc (NASDAQ:AAPL)

Number of Hedge Fund Investors: 184

Dan Niles, Niles Investment Management founder and portfolio manager, said during a recent program on CNBC that despite his view that the market should look beyond Mag. 7 stocks for more value, he likes Apple “a lot.”

“Apple had very little for the last three years. It grew 2% two years ago, 0% last year, 4% this year, I think next year driven by people upgrading their iPhones which they last did during COVID you are gonna see that growth rate be over 10%.”

However, the assumption that we will see a huge upgrade cycle of iPhone just because of AI is big and comes with a lot of risks. Apple Inc (NASDAQ:AAPL) trades at a forward PE multiple of around 35x, well above its 5-year average of nearly 27x. Its expected EPS forward long-term growth rate of 10.39% does not justify its valuation, especially with the iPhone upgrade cycle assumption. Adjusting for this growth results in a forward PEG ratio of 3.33, significantly higher than its 5-year average of 2.38.

Mar Vista Focus strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:

“Investors were reminded of the strength of the Apple Inc. (NASDAQ:AAPL) ecosystem as management demonstrated how generative AI solutions would be integrated into Apple’s 1.2 billion iPhone installed base. Apple plans to integrate generative AI features into its iOS 18, which will be broadly released in the fall with the iPhone 16. We believe Apple should benefit from generative AI as it will spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high-single-digits and low-double-digits over our investment horizon.”